More Consumers Plan Summer Travel as Sentiment Improves

U.S. consumers in May felt better about both the current economy and the future, according to a survey released Thursday. More are also planning to travel this summer.

The Royal Bank of Canada said its consumer outlook index rose one point to 47.6 this month, the highest since the last economic expansion that ended in December 2007.

The RBC current conditions index increased to 38.7 from 37.2 last month. The expectations index rose to 57.5 from 55.8 in April.

The report said consumers are feeling slightly better about the strength of their local economies and a slightly higher proportion expect their personal finances will be stronger in six months.

Even so, consumers continue to suffer from job jitters. The May jobs index fell to 53.6 after it plunged to 54.1 in April from 57.0 in March.

The reticence isn’t surprising given that recent U.S. labor data have weakened. Jobless claims have been rising, and March payrolls increased just 120,000, while the unemployment rate is at a high 8.2%.

Reflecting the recent drop in gasoline prices, the inflation index declined to 75.7 from 78.0 in April.

With Memorial Day less than four weeks away, RBC asked consumers about their summer vacation plans. The results were better than in 2010, the last time when similar questions were asked.

Two-thirds of respondents, 67%, plan to drive to a vacation site and 34% plan to take a domestic flight. Those numbers are up from the respective 2010 answers of 59% and 26%.

Additionally, 17% said they are likely to take an international trip, up from 12% in 2010.

Consumers remain worried about the cost of travel. The report shows 49% have cut back or canceled vacation plans because of high gasoline prices and 30% said the cost of airline tickets caused them to curtail plans.

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